Increasing poverty in older age is bad news for health

New research from the London School of Hygiene and Tropical Medicine (LSHTM) and the University of Cambridge suggests that because many UK citizens are likely to be poorer than expected in old age, their health outcomes will suffer. The authors of an editorial published in the journal Age and Ageing predict that if left unchecked, adverse economic circumstances will negatively impact the health of future generations of elderly people.

A number of major economic challenges facing the UK are outlined in the paper, including poorly performing pensions, changes to taxation, proposed changes to the universal benefits system and a lack of cross-party consensus concerning the future funding of social care. The researchers contend that such factors are likely to damage the health of British pensioners in addition to their wealth.

In an interview with ScienceOmega.com, LSHTM’s Professor Martin McKee CBE, who co-authored the paper with the University of Cambridge’s Dr David Stuckler, explained what the deteriorating state of older people’s finances might mean for their health.

"Previous studies demonstrate that poverty and relative inequality negatively impact health in all sorts of different ways," he explained. "The materialist explanation of health inequalities states that if you are poor, you have less access to all of the things that allow you to be healthy. For example, bus passes benefit health because they enable people to get out and about, and to participate in physical activity. Other evidence suggests that poorer members of society tend to adopt riskier behaviours, such as smoking and hazardous drinking. Essentially, we are talking about two pathways to poor health: one through poverty and the other through adverse behaviour. These pathways tend to operate in conjunction with one another.

"In our paper, we focused on the ‘disappointment paradox’ – a phenomenon whereby people are more significantly affected by losing what they were expecting than they would have been by an inadvertent gain. Oddly, this relationship is not symmetrical. For instance, if you receive a bonus, it will benefit you. However, if you lose something of equivalent value that you were expecting to have, you will fare disproportionately worse. The point that we are making is that older people are going to be hit in a number of ways. Many will be significantly poorer than they had anticipated and this is likely to adversely impact their health outcomes."

I went on to ask Professor McKee whether in the future, the state of one’s finances will have a greater impact on health outcomes than it does today.

"That is not what we are suggesting," he replied. "There is a wealth of literature showing how the state of a person’s health is related to their gradient of income. For example, the Whitehall Study of British civil servants demonstrated that even individuals who are not quite at the top of their profession have worse health than those who are at the top. You can see this relationship right across the income spectrum. However, the question that you are asking is whether this gradient is likely to become steeper in the future. The answer is that we don’t know. We can say that the disappointment paradox will play an important role. You don’t miss what you’ve never had but if you receive less than you were expecting, you will be disproportionately affected. This negative effect will be in addition to any adverse impact associated with your position on the income-health gradient. In terms of the gradient itself, we can only speculate as to how it might shift."

Professor McKee and his co-author also point out that this situation is more severe in the UK than in the majority of other European countries. Indeed, in 2010, the only European Union member states in which pensioners were at greater risk of poverty were Cyprus, Bulgaria and Spain. I asked why these dangers seem to be more pronounced in the UK than they are elsewhere.

"We have one of the meanest pension systems in Europe," Professor McKee replied. "In order to achieve a living wage, many UK citizens in receipt of basic pensions have to have their incomes topped up by benefits. This does not tend to happen across the rest of the EU. Most European countries have earnings-related pension schemes so that pensioners are relatively well off. So, what has happened in the UK? In the 1980s, the government disconnected the link between pensions and average earnings. Consequently, pensions fell disproportionately below average earnings. The last Labour government introduced tax changes which made private pensions less affordable.

"The fundamental problem with private pensions in the UK, however, is that pension providers are charging such huge fees. As a result, during the course of the last decade, UK investors have seen virtually no growth – or even negative growth – in their pensions. In contrast, the Danish pension system, for example, is a private-public partnership which is semi-regulated by the state. Because the fees are more reasonable, Danish pensioners are receiving approximately 50 per cent greater returns for the same levels of investment. In comparison with most other European countries, the pension system in the UK represents very, very poor value for money."

In light of Professor McKee’s damning assessment of the UK pension system, I asked what measures he would like policymakers to take in order to avoid adverse health outcomes for elderly people. As he explained, whilst pension reform will certainly be necessary, changes must also be made within other sectors.

"First of all, the government needs to sort out social care," he said. "The recommendations of the Dilnot Commission, which was launched in 2010, should be accepted in their entirety. They are perfectly sensible and they are affordable so there is really no reason for them not to be accepted. Long-term social care in the UK is a mess. Again, private care providers – many of whom are political donors – are doing very well out of the system. A lot of people are making a lot of money out of social care, and it is these people who are happy with the situation as it is. However, I think that most would agree that reform of the social care sector is desperately needed.

"Of course, we also need to upgrade pensions substantially," Professor McKee continued. "It is bizarre in the extreme that an old-age pension is not enough to live on; that people who only have state pensions require welfare benefits to top up their incomes. This situation also creates a disincentive for saving. We need to look closely at the models of other European countries in which governments – by means of public provision, careful investment and reasonable fees – seem able to provide perfectly good pensions for everybody. If UK providers weren’t charging such exorbitant fees and gambling with our money, I think that our pensioners would fare much better."

This paper paints a bleak picture for future generations of UK pensioners – both in terms of their health and their wealth. To conclude our conversation, I asked Professor McKee within what timeframe this situation is likely to occur.

"Primarily, we are looking beyond the next election," he answered. "However, there is already a crisis in social care. We have the highest rate of winter mortality in Europe, and one of the main reasons behind this is that pensioners cannot afford to heat their homes. Life expectancy at the age of 65 is lower here than it is in many comparable countries. Older people in the UK have been doing very badly for a very long time. We are simply arguing that things are going to get worse."